E-commerce a bigger sell in UAE amid Covid-19
Dubai - E-commerce expenditure has exceeded expectations by more than $52 billion since the lockdown began in March, reports found.
The Covid-19 pandemic is expected to leave a lasting mark on consumer behavior and drive an ever-increasing share of e-commerce in the UAE's retail sector, experts said.
Karl Nader, managing director, AlixPartners Middle East, said that the pandemic accelerated the conversion to online, particularly in essential categories such as grocery shopping.
"Prior to the pandemic, the grocery industry was very slow to adapt across the region with online sales accounting for less than one per cent of total grocery sales in the UAE and KSA. However, today, this number varies by grocer, with some of the leading grocers doubling their share of online sales during the pandemic," he said.
Anastasia El Hage, founder and CEO of HUBB Global Group, also pointed to a shift in consumer behavior, as people across the UAE became more open to the e-commerce space. Some retail companies addressed their challenges head on and took timely decisions to develop their online businesses. These are the companies that are likely to emerge as market leaders, she said.
According to a recent report by Adobe, e-commerce expenditure has exceeded expectations by more than $52 billion since the lockdown began in March.
"With brands coming up with innovative contactless formats, online demand has increased for multiple categories, including entertainment, fashion, groceries, and F&B," El Hage said. "The change in most business models, due to Covid-19, will permanently reshape e-commerce as we know it."
She also noted that consumers are likely to benefit from this change owing to the ease and comfort in making daily transactions, as well as large purchases. "With retailers taking cautious steps towards reaching their end users with innovative measures, they have developed a stronger bond. Even though consumers were initially apprehensive about making purchases, they have been overwhelmed by the way retailers are tailoring their business models to fit their needs while not compromising on their safety. We believe this level of engagement between businesses and customers will be mutually beneficial."
Abboud Ghanem, regional vice president for the Middle East and Africa at Alteryx, explained that the demand landscape has shifted significantly over the course of the pandemic, and will continue to do so for months to come. Consumers, he said, want a faster, more immediate, and customized experience, all at a competitive cost.
"Retailers have needed a more holistic view of their customers and their supply chain," he said. "They have to learn to engage with their customers faster and create dynamic merchandising and offers in order to stay relevant."
Ghanem also noted that, in healthy economic times, enterprises rely on data and analytics to be competitive.
"In the uncertain times we now find ourselves, leveraging a data and analytics culture to make better decisions to survive, let alone thrive, is paramount," he stressed. "Retailers and e-commerce sites have been creating volumes of data for many years, but many don't understand that there is money hiding in that data. They need to ask themselves if they can use the data to gain the insights needed in order to create a competitive edge in the market."
For this to happen, he said that retailers need to have an analytics platform that combines online and offline data to understand what customers are interested in, who to target with personalised offers, and create the engagement that successfully improves consumer conversions.
"The current online offering can improve, as, in many cases, it was originally developed as an add-on and lacks true integration with the customer journey and overall operations," added Nader.
Most non-essential retail stores in the UAE and KSA are operated by diversified conglomerates that do not own the brand, he revealed. "It took them some time to figure out the optimal e-commerce model to operate. Moreover, online still represents a very small share of the business, and except for a handful of groups, it is managed as a side business and often supported by separate teams."
However, as consumers begin to transfer more of their personal engagement and purchasing to digital channels, he said that retailers must not only work to improve their customers' omni-channel experience, but also better integrate and manage omni-channel operations.